In-Home Counsel Alert: Navigating the Dangers of AI Washing in 2025

0
14
In-House Counsel Alert: Navigating the Risks of AI Washing in 2025

The previous 12 months was stuffed with thrilling breakthroughs of merchandise constructed with new generative synthetic intelligence (Gen AI) know-how, however it additionally ushered in a peculiar new regulatory skirmish that in-house counsel could be clever to observe in 2025.

The primary warning pictures have been fired again in March, when the Securities and Trade Fee announced settled costs towards two funding advisory corporations for making false and deceptive statements about their purported use of AI. SEC Chair Gary Gensler launched a brand new battleground of regulatory curiosity in his remarks: “Funding advisers shouldn’t mislead the general public by saying they’re utilizing an AI mannequin when they aren’t. Such AI washing hurts buyers.”

In-house counsel want to take a seat up and take discover of this potential new space of regulatory inquiry so they’re ready to assist defend their organizations from bold authorities enforcement actions.

“Understanding how the SEC could also be approaching its current regulatory authority will help corporations that develop and use AI keep forward of regulatory developments,” writes a trio of legal professionals from Skadden Arps, in a Sensible Steering article published by LexisNexis®.

And this new regulatory agenda is just not restricted to federal companies. The LexisNexis® State Internet® Capitol Journal™ reports that AI Washing is a subject that’s anticipated to be a problem for state lawmakers subsequent 12 months.

Understanding AI Washing: Deceptive Claims within the AI Trade

AI Washing is a time period borrowed from the concept of “greenwashing” and refers back to the follow of falsely claiming to make use of AI know-how to boost an organization’s services or products. Corporations might exaggerate or misrepresent their AI capabilities to achieve a aggressive edge or enhance their model picture.

The motive force behind the surge in AI-related claims is not any shock: there may be some huge cash to be made on this lightning-hot area proper now. In reality, startups that point out “AI” entice 15% to 50% extra funding than these that don’t, according to research by MMC, a London-based enterprise capital agency.

The issue is that there isn’t a regular agreed-upon definition of AI, so one firm’s advertising and marketing declare could also be a regulator’s AI washing scheme.

“It’s necessary to have the ability to inform the distinction between what’s actual and what’s being concocted by advertising and marketing departments merely taken with what they will promote us,” writes Forbes columnist Bernard Marriott.

For instance, BBC reports that some corporations might declare to make use of AI once they’re truly utilizing less-sophisticated computing, whereas others overstate the efficacy of their AI over current methods or maybe counsel that their AI options are totally operational when they aren’t.

Methods for In-Home Counsel to Mitigate AI Washing Dangers

In-house authorized departments play an important function in guaranteeing an organization’s compliance with rules and moral requirements. When an organization engages in AI Washing, it exposes itself to a number of dangers, corresponding to authorized legal responsibility for false or deceptive advertising and marketing claims, reputational harm that may erode prospects’ belief—and investor danger corresponding to that pursued this 12 months by the SEC.

The Sensible Steering crew for LexisNexis has printed a breadth of resources to assist in-house counsel navigate the advanced authorized points related to AI-enabled services and products. Right here are some things that authorized specialists suggest for in-house counsel to assist defend their firm from AI Washing claims:

  • Perceive AI Claims—Fastidiously evaluation all public statements and advertising and marketing supplies that reference AI to make sure the claims are correct, verifiable and supported by concrete proof.
  • Collaborate with Technical Groups—Work carefully with information scientists, engineers and different technical specialists to grasp the precise AI capabilities and limitations.
  • Develop AI Tips—Create inner pointers that define the ideas and requirements for AI improvement and deployment, addressing points corresponding to information privateness, bias and transparency.
  • Conduct Common Audits—Implement common audits to evaluate the accuracy of AI claims and guarantee compliance with inner pointers and exterior rules.
  • Monitor Trade Requirements and Rules—Keep knowledgeable about rising AI rules and {industry} finest practices by ensuring you might have entry to dependable authorized information and data that’s up to date in real-time.
  • Practice Workers—Educate staff about AI ethics and the potential dangers of AI Washing.

By taking pro-active steps to handle potential AI Washing concerns, in-house counsel will help safeguard their firm’s repute, mitigate authorized dangers and guarantee moral AI practices.

Important AI-Powered Authorized Instruments for In-Home Groups

LexisNexis offers AI-powered legal tools for corporate legal teams, together with authorized analysis, drafting and summarization instruments that delivers on the potential of Gen AI know-how. The platform delivers solutions to your in-house authorized crew which can be grounded on the planet’s largest repository of correct and unique authorized content material from LexisNexis, with industry-leading information safety and a spotlight to privateness.

All of those assets are accessible to in-house authorized groups through Lexis+® General Counsel Suite, which supplies an unlimited assortment of authorized assets, breaking enterprise and authorized information, and Sensible Steering content material.

Learn more about Lexis+ GC Suite or to register for a free 7-day trial.